Near Record Low Mortgage Rates Buoy Housing Recovery

By Gretchen Wegrich

Average fixed mortgage rates dropped for the fourth consecutive week, continuing to support the housing recovery with less expensive credit, reported Freddie Mac today in its Primary Mortgage Market Survey. Notably, the 15-year fixed rate mortgage bottomed out at a new all-time record low of 2.61 percent this week, as did the 5-year ARM at 2.58 percent.

“The housing market is getting a boost with mortgage rates hovering at or near record lows,” said Frank Nothaft, vice president and chief economist at Freddie Mac.

He added, “For instance, existing home sales averaged an annualized pace of 4.94 million over the first three months of this year, the most since the fourth quarter of 2009. More impressively, new home sales topped 424,000 during the first quarter, which was the strongest since the third quarter of 2008.”

By the Numbers

In the fixed-rate mortgage category,30-year fixed-rate mortgages averaged 3.40 percent with an average 0.8 point for the week ending April 25, down from last week when it averaged 3.41 percent. At this time last year, the 30-year FRM averaged 3.88 percent.

Fifteen-year fixed rate mortgage average 2.61 percent this week, with an average 0.7 point, down from last week when it averaged 2.64 percent. A year ago at this time, the 15-year FRM averaged 3.12 percent.

Meanwhile, 5-year ARMs averaged 2.58 percent this week with an average 0.5 point, down from last week when it averaged 2.60 percent. A year ago, the 5-year ARM averaged 2.85 percent.

Additionally, 1-year ARMs averaged 2.62 percent this week with an average 0.3 point, down from last week when it averaged 2.63 percent. At this time last year, the 1-year ARM averaged 2.74 percent.

“The sales pickup is helping to support house-price gains,” said Nothaft. “For instance, the Federal Housing Finance Agency reported that February marked the thirteenth consecutive month that it has recorded an annual rise in its U.S. house price index, which rose by 7.1 percent in the twelve months through February, the most since May 2006. Even with these gains, this U.S. index is still 13.6 percent below its peak set in April 2007."

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.